Sanghi Polyesters Ltd Auditor Reports

SANGHI POLYESTERS LIMITED ANNUAL REPORT 2008-2009 AUDITORS REPORT To The Shareholders, Sanghi Polyesters Limited. 1. We have audited the attached Balance Sheet of M/s. SANGHI POLYESTERS LIMITED as at 31st March, 2009 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditors Report) Order, 2003 issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order. 4. As mentioned in Note No.5 of Schedule -14 - Notes to Accounts relating to non discharge of the One Time Settlement obligation by the company, we are of the opinion that the secured loans and the losses are understated to the extent of Rs.212.08 crores. 5. As mentioned in Note No.6 of Schedule -14 - Notes to Accounts relating to non provision of interest for the year on the loans, we are of the opinion that the secured loans and the losses are understated to that extent. 6. As mentioned in Note No. 18 of Schedule 14 - Notes to Accounts regarding non provision of Gratuity payable as per Actuarial Valuation as prescribed under Accounting Standard 15. 7. Further to our comments in the annexure referred to above, we report that: a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company, so far as it appears from our examination of the books. c) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account. d) In our opinion the Balance Sheet and the Profit & Loss Account complies with the mandatory Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956. e)On the basis of written representations received from the directors of the company as on 31st March,2009 and taken on record by the board of directors, we report that none of the directors of the company has, prima facie, any disqualifications as referred to in Section 274(1)(g) of the Companies Act, 1956. f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts of the company and read together with notes thereon, give the information required by the Companies Act, 1956 in the manner so required and subject to our observations in Paragraphs 4, 5 & 6 referred above give a true and fair view in conformity with the accounting principles generally accepted in India in the case of i. The Balance Sheet, of the state of affairs of the Company as at 31st March, 2009 and ii. The Profit & Loss Account, of the Loss of the Company for the year ended on that date. iii. The cash flow statement, of the cash flows for the year ended on that date. For Jayant & Sadashiv, Chartered Accountants (Jayant Palnitkar) Partner Hyderabad, 29th August, 2009 ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date) 1. In respect of its fixed assets: a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets b) All the assets have been physically verified by the management during the year and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification as compared with books of accounts. c) During the year, the company has not disposed any part of the plant & machinery, according to the information and explanation given to us. 2. In respect of its inventories: a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. c) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. 3. In respect of loans, secured or unsecured granted or taken by the company, to or from companies, firms or other parties covered in the register maintained under section 301 of Companies Act, 1956. In terms of Sub-section (6) of Section 370 of the Companies Act, 1956, according to the information and explanations given to us: a) The company has granted advances, secured or unsecured to companies, firms or other parties listed in the register maintained u/s. 301 of the Act, however the terms and conditions are not prima-facie prejudicial to the interests of the company. The terms and conditions do not stipulate payment of interest. And no repayment schedule is stipulated. b) The company has not taken loans, secured or unsecured to companies, firms or other parties listed in the register maintained a/s. 301 of the Act during the current financial year. The terms and conditions with regard to interest, repayment and overdue amounts are not applicable. 4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods. 5. In respect of Register maintained a/s.301 of the Companies Act, 1956: a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered. b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- or more in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time, except in the case of sale of investments which are done at face value. 6. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public. Hence the provisions of section 58A of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975 are not applicable to the Company. 7. In our opinion, the company has an internal audit system commensurate with the size and nature of its business. 8. In our opinion, the Central Government has prescribed for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956. We have broadly reviewed the cost records maintained and we are of the opinion that prima-facie the prescribed accounts and records have been made and maintained. We have not however made a detailed examination of the records with a view to determining whether they are accurate and complete. 9. According to the information and explanations given to us in respect of statutory dues: a) The Company has been regular in depositing the undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Customs Duty, Excise Duty, Cess and any other statutory dues applicable to the company with the appropriate authorities during the year. There is no undisputed statutory dues outstanding for a period of more than six months as at 31st March, 2009 from the date they became payable. b) According to the information and explanations given to us, except for the following there are no other dues of Income Tax, Sales Tax, Customs duty, Excise Duty and cess, which have not been deposited on account of any dispute. Name of the Nature of Dues Amount Period Forum where Statute (Rs.) dispute is pending The Central Delayed claims by 16324762 01.06.2006 Superintendent of Excise Act, the Dept. towards to Central Excise, 1944 Cenvat Credit 14.06.2006 Koheda Range. adjusted. The Central Interest on 36500000 July 2004 Superintendent of Excise Act, Delayed payment to March Central Excise, 1944 through Cenvat 2005, Dec. Koheda Range. Credit 2005 to Feb. 2006 The A.P. Sales Sales Tax 280460554 1991-92 to DCTO Tax Act Deferment 2006-07 Vanasthalipuram 10. The accumulated losses as at 31st March, 2009, are not more than fifty percent of its net worth subject to Note No.4 & Note No.5 of Schedule 14- Notes to Accounts. The company has incurred cash losses during the current financial year and also during the immediately preceding financial year. 11. According to the information and explanations given to us by the management, we are of the opinion the company has defaulted in repayment of its dues to Banks and financial institutions. 12. On the basis of information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13. The company is not a chit fund or niche mutual benefit fund /society. Therefore, the provision of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company. 14. The company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provision of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company. 15. According to the information and explanation given to us the company has not given any guarantee for loans taken by others from banks or financial institutions. 16. In our opinion, the Term Loans have been applied for the purposes for which they were raised. 17. On the basis of information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that the no funds raised on short-term basis have been used for long term investment. No long-term funds have been used to finance short-term assets except permanent working capital. 18. The company has not made any preferential allotment of shares during the year. 19. According to the information and explanations given to us, during the period covered by our audit report, the company had not issued debentures during the year. 20. According to the information and explanations given to us, the company has not raised funds by public issues during the year covered by our audit report. Accordingly the provisions of clause 4 (axe) of the Companies (Auditors Report) Order, 2003 are not applicable to the company. 21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year. For Jayant & Sadashiv, Chartered Accountants (Jayant Palnitkar) Partner Hyderabad, 29th August, 2009